[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39455-39456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16027]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42959; File No. SR-CHX-00-21]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated, Amending Its Rules To Mandate Decimal Price Testing

June 20, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 14, 2000, the Chicago Stock Exchange, Incorporated (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the CHX. The CHX has 
designated this proposal as one concerned solely with the 
administration of the CHX under Section 19(b)(3)(A)(iii) of the Act,\3\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to add a new rule (Article XI, Rule 12) to 
require Exchange members to participate in such decimalization-related 
testing as the Exchange may mandate and to maintain documentation of 
that testing. The text of the proposed rule change is available upon 
request from the CHX or the Commission.

II. Self-Regulatory Organization's Statement of the Purpose, of, 
and Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received regarding the proposed rule change. 
The text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Although the starting dates and specific details of an industry-
wide implementation plan have not yet been finalized, national 
securities exchanges and other market participants have begun testing 
the systems involved in the conversion to decimal-based trading. The 
CHX, in cooperation with the Commission, the Securities Industry 
Association, and other self-regulatory organizations, has been 
participating in this important testing effort. The proposed rule 
described in this filing requires CHX member firms to participate in 
such decimalization-related testing as the Exchange may require and to 
maintain documentation, including the results, of that testing.\4\
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    \4\ The Exchange will file additional decimalization-related 
rule changes within the time frame required by the Commission's 
recent order. See Securities Exchange Act Release No. 42914 (June 8, 
2000), 65 FR 38010 (June 19, 2000). This proposed rule change has 
been submitted first to ensure that member firms receive appropriate 
notice of the contemplated testing requirements.
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    Specifically, the proposed new rule requires CHX members to 
participate in any point-to-point and industry-wide computer testing 
that the Exchange may require.\5\ It also requires members to prepare 
and submit such reports relating required testing as the Exchange may 
request, and to retain other testing-related documentation for 
inspection by the Exchange.
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    \5\ Point-to-point tests are conducted between a member's system 
(or the systems of the member's service provider) and the Exchange's 
systems. Industry-wide testing involves a wide variety of industry 
participants, including national securities exchange, registered 
clearing corporations and broker-dealers. The Exchange currently 
intends to require each of its active members (or their service 
providers) to participate in point-to-point test, and may require 
certain members to participate in industry-wide testing.
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    These requirements are similar to those that the Exchange imposed 
in 1999 as part of its Year 2000 testing effort, and are similar to 
those currently being proposed by at least one other national 
securities exchange. This proposed new rule shall expire upon the full 
implementation of decimal pricing.
2. Statutory Basis
    The CHX believes the proposed rule is consistent with the 
requirements of the Act and the rules and regulations thereunder 
governing national securities exchanges, and, in particular, with the 
requirements of Section 6(b) of the Act.\6\ Specifically, the CHX 
believes the proposed rule is consistent with Section 6(b)(5) of the 
Act \7\ in that it is designed to promote just and equitable principles 
of trade, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the foregoing rule change is concerned solely with the 
administration of Exchange, it has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and subparagraph (f)(3) of Rule 19b-4 
thereunder.\9\ At any time within 60 days of the filing of such 
proposed rule

[[Page 39456]]

change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purpose of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(3).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and nay person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW, Washington, 
DC. Copies of such filing will also be available for inspection and 
copying at the principal office of the Exchange. All submissions should 
refer to File No. SR-CHX-00-21 and should be submitted by July 17, 
2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16027 Filed 6-23-00; 8:45 am]
BILLING CODE 8010-01-M